US Army Taps KKR and Carlyle for 4 Billion Dollar Data Center Development on Military Bases

Private equity giants KKR and Carlyle Group to build massive data centers on Texas and Utah military bases to meet the Army's surging artificial intelligence needs.

By: AXL Media

Published: Mar 27, 2026, 11:21 AM EDT

Source: Bisnow

Strategic Infrastructure on Federal Land

The proposed projects involve the construction of two high-capacity data centers on land leased from the Army for a 50-year term. Carlyle Group has been selected to develop a site spanning 1,384 acres at Fort Bliss in Texas, while CyrusOne—an affiliate of KKR—is slated to develop a similar facility on 1,201 acres at the Dugway Proving Ground in Utah. Each project is projected to carry a price tag of roughly $2 billion. Under the terms of the agreement, the Army will not provide direct capital but will instead receive a dedicated percentage of each facility's computing capacity in exchange for the land use.

Powering the Future of Military Intelligence

The Fort Bliss facility is designed as a 2.5 to 3 gigawatt (GW) development, featuring its own on-site power generation and a closed water system. This self-contained infrastructure is a strategic move to ensure operational resilience while minimizing the environmental and utility impact on the surrounding El Paso community. Military officials expect the Texas site to come online during fiscal year 2027. The Dugway project in Utah, which is designed for 1 GW of capacity, is on a slightly longer timeline with a projected delivery in fiscal year 2029.

The Military's Increasing Dependence on Private Capital

The partnership highlights a significant shift in how the Department of Defense is addressing its technological needs. Army Secretary Dan Driscoll indicated that these developments are likely the first in a series of similar public-private partnerships. With the Pentagon's cyber budget climbing to $15 billion for 2026—a 4% increase over the previous year—the military is increasingly looking to private equity’s "vertically integrated" platforms to bypass the slow pace of traditional government procurement and meet immediate "massive demands" for data processing.